If you own a small, independent restaurant in New York State (NYS), you may be eligible for the State’s new return-to-work tax credit, which is part of the 2021 state budget legislation and provides qualifying restaurants with a tax credit of up to $50,000 and $5,000 per net new hire.

To qualify for the tax credit, restaurants must:

  • Be small and independently-owned;
  • Operate in New York City, or in areas that were designated as an Orange Zone or a Red Zone for at least 30 consecutive days by the State Department of Health during the COVID-19 emergency;
  • Demonstrate COVID-related losses and show proof of hiring at least one full-time worker at the restaurant;

To be responsive to the needs of COVID-impacted restaurants, the Restaurant Return-to-Work Tax Credit provides a Fast Track Option, which allows restaurants to claim the credit before the end of the tax year starting after August 31, 2021.

If you choose not to use the Fast Track Option, you can claim the tax credit on your 2021 NYS tax return as long as you can demonstrate a net employee increase of at least one full-time employee between April 1, 2021 to December 31, 2021.

This new Restaurant Return-To-Work Tax Credit Program is another part of the State’s 2022 budget plan to restart the NYS economy which also included support for arts and cultural organizations, the tourism industry, restaurants, and the state’s small businesses, which represent 98% of all New York State businesses.

The State has also launched the $100 million New York City Musical and Theatrical Production Tax Credit program to support stage-based arts and entertainment businesses which were also hard-hit by the pandemic.

For more information, you can visit the Empire State Development program website at: NYSBusinessRecovery.ny.gov.

Jonathan Medows is a New York City based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He provides tax, accounting and business articles for freelancers on his website, http://www.cpaforfreelancers.com, which also features a free newsletter, blog and a free Self-Employment Readiness Assessment.